June 21, 2024
Places to get Capital to start a business in Kenya.

If you are a business-oriented person you might have found yourself with very great business ideas in mind several times. At some point, you feel soo certain that the business will definitely blow up. But the problem is always the funds you need to make that happen.

Money is one thing that makes a great business idea feasible and if you don’t have it, your business idea is just a fantasy. Well, do you think all successful business owners had the finances at the start of their journey? The answer is No.

Ok, where did they get the funding from then? That is what we will discuss in today’s article. We will share eight sources of capital for your business in Kenya. At the end of the article, you will decide which option works best for you.

#1. Personal Savings

Places to get Capital to start a business in Kenya.

If you have found yourself thinking of business ideas, chances are you have tried saving for the same. Well, you might be asking yourself why I choose this as the first point. I’m sure if you are reading this article this is not the kind of source you want to learn about because the high chances are that you do not have personal savings.

However, we can’t write this article without mentioning personal savings. This is normally the first option for every entrepreneur before they think of any other source. The first thing you look at as an aspiring business owner is what you have at hand.

Personal savings is the best option when starting a business for the following reasons:

  • You won’t have extra costs such as interest rates.
  • You have full ownership of your business since you did all the funding
  • You have better control of your business revenue and profits.

Therefore if you have some savings use that to start your business and consider other options later when you want to expand your business. Considering other sources when your business is stable makes it easier and more controllable.

#2. Merry Go Round (Chama)

Places to get Capital to start a business in Kenya.

A merry-go-round or a Chama is also a great way to raise capital for your business. If you are familiar with this it’s all about a group let’s say of 100 individuals who contribute money maybe on a monthly basis. 

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All they do is contribute let’s say Ksh 2000 for each individual and give each contribution to one member until each one of them receives the cash the circle goes back again to the first individual.

 This is why it is referred to as a Merry-go-round. With this, you can fund your start-up and you won’t be owing anyone as long as you still take part in the ‘chama’.

#3. Angel Investors

Just like its name ‘angel investor’ this type of investment can save you and your idea. Angel investors are wealthy individuals who want to be silent partners in your business.

Just like banks angel investors need a strong business plan. You need to prove to them that your business has the potential to generate high returns to win their trust. Although angel investors are more likely to take a measured risk, you need to produce a good business plan to prove to them that your business idea is worth their money.

Although they offer different levels of funding, they are more flexible than some of the traditional financial providers. One of the major benefits of angel investors is that some of them offer mentorships in addition to seed funding and investment.

This option is less risky than bank loans. Most of these angel investors are businessmen and if anything goes wrong with your business, they are more likely to be understanding and therefore they will not pressure you.

#4. Micro Finance

There are so many microfinance institutions in Kenya that are always there for small start-ups. Most of these institutions target special interest groups and community development projects but as an individual, you can benefit from microfinance institutes too.

One of the most known microfinance institutions is Faulu Kenya. It has several packages geared towards small to large businesses, asset finance, chamas aka table banking groups investments, and self-help groups among others.

You can also check other microfinance institutes in Kenya such as Zawadisha, KWFT, Choice Microfinance Bank Limited, Unaitas Sacco, Plan International, Craft Silicon, Taifa MFI, Opportunity Kenya, Rafiki Microfinance Bank, etc.

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#5. Government Funds

There are several types of government support available to entrepreneurs the only problem is that many business people don’t know how to apply for those funds.

The governments especially county governments have funds dedicated to startups and any other business small businesses. However, you have to meet certain specifications to qualify for the funding.

Youth Enterprise Development Fund which is a flagship project of Vision 2030 is one of the funds set aside by the Kenyan government to support Kenyan youth who want to start or are already running small businesses.

The major benefit of Government funds is that it comes with incentives such as tax exemptions and zero interest rates. If you like this option give it a trial, especially through your county government.

#6. Venture Capitalists

Places to get Capital to start a business in Kenya.

Venture capitalists are more like Angel investors. Although VCs are very picky about the types of businesses to support, they believe in your business and are always willing to help you from the ground up. 

Although Venture capital investments tend to focus on companies that are already established they occasionally get involved with funding startup businesses. 

VCs mostly look for businesses with high-growth potential. They take a valuation of a business model to ascertain its growth potential and then invest accordingly.

They provide seed money and in exchange, they have an equity position in the company. They also provide management/human resource support. Some of these VCs include Nairobi Garage, Seed Capital, Savannah Fund, Westpac, and Monsanto Fund among others.

#7. Foundations

Many corporates and organizations in Kenya set up foundations as part of their Corporate Social Responsibility (CSR) programs. They hand out grants and interest-free loans to individuals in their sector. These grants are popular in the arts, academics, and research sectors.

You need to understand which company funds project like the one you have, grant opening dates, and the application process. Some of these foundations include Safaricom, Chandaria, Aga Khan, Master Card, Coca-Cola, the Ford Foundation, etc.

#8. Crowd Sourcing.

A more modern version of financing your start-up is through Crowd Sourcing. This type of funding works well for some business types, especially product development. However, this method has limits to how much you can raise using this method.

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Crowdsourcing is peer-to-peer lending networks that are normally a group of people pooling their resources together and then loaning them out to borrowers. These loans are to be repaid later with interest.

The difference between crowdfunding and traditional lending institutions is that 

  • crowdfunding has less strict eligibility requirements (no bank account, no guarantors, no collateral assets needed, or a salaried job). 
  • Some allow you to choose a repayment schedule.
  • Your credit limits increase every time you do repayments.
  • Some of them even do not ask for interest rates. ( you only give 5% of the total cost)

You can therefore grow your business with their help and repay them once you are well established in your business. Some of these Crowdsourcing platforms include KIVA, Cheetah Fund, Fasini, Quirky Africinvest, Enabilis, and Zidisha among others.


Don’t allow your brilliant business idea to go to waste. We hope the above types of funding will help you turn your idea into a successful business. Choose a funding method that suits your business idea and go for that dream.

Remember that you need a solid plan when it comes to your business since an opportunity doesn’t come twice. Get to understand the funding method you want to use to know what you are getting yourself into.

Before you make your final decision, keep in mind that you will need to under more about the policy of any method or institute you decide to go with. You will have to pay more attention to their interest rates and their terms. 

All you need is a lender who will help you grow without any pressure. So make sure your business can work well with that option.

There are other funding options that we have not to discuss so dig deeper before making any decision. We hope you get the right option and wish you success in your business in advance.

Help us reach more people by sharing this article with anyone with a great idea just like yours.

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